10 steps to a successful business case for IoT
business case for IoT

10 steps to a successful business case for IoT

In this must-read guide to building a business case for IoT programmes, Andrew Hobbs reveals how best to identify and act on digital innovation opportunities to boost your company’s efficiency, productivity, and profitability.

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1 | Recognise the need for a business case

All around us businesses are being transformed by the Internet of Things (IoT) and digital technologies, homes are being made ‘smart’, and we are consuming content in virtual and augmented realities.

So it should be clear to even a casual observer that the world in which we live, work, and play is being transformed by new technology. The key is realising that even the smallest devices or goods can now generate data for analysis and new insights.

Yet with all of these new opportunities, it can be a daunting proposition to navigate the transformed digital landscape, especially when spurred on by the fear of being left behind by competitors and more agile start-ups.

However, it’s vital not to implement an IoT initiative for its own sake. The first step is to identify suitable use cases, and build a compelling business case from there.

But where to begin?

2 | Start on the shop floor

While many organisations might consider that a strategic change as significant as digital transformation should come from the top, the best use cases are often gauged on the ‘shop floor’ – literally in the case of manufacturing, for example.

The initial R&D may require sign-off and be placed under the leadership of a senior technology or operations manager, but often the best use cases will come from engineers and other employees who play a hands-on role in everyday processes.

Digital transformation is as much about issuing an open call for innovation as it is a top-level strategic change. As a result, a traditional top-down approach is unlikely to get the best out of IoT technologies.

Often, successful IoT implementation is about the ability to spot opportunities for efficiency and productivity gains, or added value. This can come from anyone with experience of those processes, regardless of their rank within the company.

3 | Identify meaningful data

Linked to this is the need to identify what kinds of data streams and analysis would be useful to your organisation. There’s nothing to be gained from simply collecting data as an end in itself; there must be some business value in the insights.

Often this will involve taking new data from sensors and actuators and combining it with existing data from legacy machinery and other systems.

At its best, the Internet of Things allows companies to avoid overstocking, downtime, and unnecessary fuel usage; to optimise maintenance schedules and output; monitor critical processes; increase automation; and better understand and serve their customers.

4 | Employ predictive analytics

In the industrial world, downtime is a major cause of lost productivity and cash. As such, it represents one of the key areas where the IoT can help.

For example, digital twins allow companies to model their machines, processes, and networks in a virtual environment and use them to predict problems before they happen, as well as boost productivity and efficiency.

When combined with sensors that monitor temperature, pressure, RPM, and other critical factors, workers can prevent problems more effectively and react faster – often thanks to alerts sent to mobile devices.

A viable business strategy will identify such uses cases, calculate the potential improvements that the IoT could make, connect data and business process efficiency, and measure them against the cost of implementing and maintaining the new technology.

In this example, a business case for IoT will de-risk the implementation by guaranteeing downtime reduction and identifying business outcomes.

5 | Track your products and assets

Suitable IoT use cases can also be identified once products or commodities are in the supply chain. In fact, the supply chain industry is currently the biggest user of IoT technology.

If your business is heavily reliant on shipping large quantities of goods over long distances, it is a primary candidate for digital transformation, and there are numerous platforms available that will enable you to monitor and track your goods, and respond quickly to stock issues and other alerts.

IoT-enabled supply chains can reduce fuel and plant costs, limit costly warehousing, and otherwise reduce shipping times and preventable issues.

6 | Create new revenue models

While the most obvious use cases for the IoT revolve around efficiency, productivity, and process monitoring, we’re increasingly seeing companies recognise the value of the IoT as being in its ability to provide them with information about their customers and how they use their products.

Internet-connected cars, coffee machines, trains, and all manner of other smart things can feed usage data back to their manufacturers and operators, informing the services they build around those products.

Few of these things were originally designed to be connected, but the IoT can add new value to them, and help improve their future design via the reams of data gathered about their real-world usage.

Companies that successfully integrate the IoT into their products in a way that benefits both the customer and their own business processes stand to reap huge benefits.

The IoT also allows organisations to move away from conventional business models to new revenue streams.

As Amazon has proved in the consumer world, products that provide businesses with valuable data can enable them to offer the same products at reduced costs, opening up new markets by replacing revenue from customers’ capital expenditure (capex) with operational expenditure (opex), via subscription models.

7 | Move from drawing board to reality

To implement a successful IoT strategy, a company first needs to fill its digital skill gaps. This can either be by retraining or supplementing existing IT or DevOps teams, or by working with a reputable third party.

In the later case, it’s vital that new partners align with your company’s ethos, or you risk alienating your colleagues, and sometimes even your customers and business partners.

Introducing an IoT strategy may mean reshaping your workforce. Role changes and redundancies require long-term consideration – and sensitivity – in order to remain faithful to the company ethos and prevent damage to the brand.

8 | Choose the right IoT platforms and partners

However, before a detailed business plan can be created, you will need to identify suitable IoT technologies and platforms.

Your needs will be as unique as your business, and will vary by industry, how many devices you want to connect, what you want to do with those devices, how you want to store and process the resulting data, and numerous other factors.

IoT Pilot offers a good starting point for creating a shortlist of possible partners based on your needs.

9 | Build a proof of concept

Other IoT projects may require little upfront investment and revolve around simple proofs of concept – for example, the purchase of one or two AR headsets if your organisation is considering using augmented reality to train employees in the use of machines, or to carry out new or complex processes.

Testing small-scale IoT concepts is a great way to prove (or disprove) their business viability, but it can sometimes be difficult to generate the same sort of value that is achievable at scale – due to smaller data samples.

Ultimately, though, a successful proof of concept is likely to be critical in convincing the board and securing the necessary budget to fund a company-wide IoT implementation.

10 | Rollout at scale

Once a business case is established for an IoT programme, the company leadership will hopefully be willing and able to invest in rolling out the desired solution at scale. Some boards tend to prioritise short-term gains, but it’s important that they recognise the longer-term strategic significance of digital transformation.

When all those around you are adapting to cultural and technological shifts it’s a case of ‘innovate or die’. Those who successfully adapt to the opportunities to become more efficient and more productive, and add value in the face of industry disruptors, will distinguish themselves in this new IoT era.

To learn more about successfully implementing an IoT strategy, visit our IoTBuild event in London, 13-14 November 2018.